Amoco group wins Azerbaijan Caspian tract

Amoco's Azerbaijan Caspian Sea Project [38846 bytes]

Exploration in the Caspian Sea off Azerbaijan is accelerating with award of an exploration contract to Amoco Corp. and partners.

Contract award to Amoco North Apsheron Petroleum Ltd. culminates several months of negotiations between Amoco, a 17.01% interest owner in the Azerbaijan International Operating Co. (AIOC), and Azerbaijani officials.

Representatives of Amoco Eurasia Petroleum Co., Houston, and Amoco Caspian Sea signed the contract Dec. 14 with the Azerbaijani government. The deal covers a 453-sq km contract area, east of the Apsheron Peninsula, which contains two identified oil prospects known as Ashrafi and Dan Ulduzu (OGJ, Dec. 2, p. 40).

"We've identified the Caspian basin as a high-priority area for growth and spending" into the next century, said L. Richard Flury, Amoco Corp.'s executive vice-president, exploration and production.

Amoco will have a 30% interest in the Ashrafi/Dan Ulduzu exploration contract. Other interests are held by Unocal Corp. 25.5%, Itochu Oil Exploration Ltd. and the State Oil Co. of Azerbaijan (Socar) 20% each, and Saudi Arabia's Delta Nimir 4.5%. If successful, industry sources speculated, the project value could reach about $1.5 billion, assuming a phased work program that would include exploration, development, and production. Amoco didn't confirm the potential value.

Terms

Contract requires bonus payments of $75 million to the Azerbaijan government, depending on successful completion of various phases of the project, and ratification by the Azerbaijan parliament is required before the contract takes effect, Amoco said.

Amoco North Apsheron Petroleum is required to drill three wells during a 3-year exploration period, as well as undertake acquisition of 3D seismic. If commercial quantities of oil are found, oil would be produced under a subsequent production-sharing contract.

Water depths over the contract area are about 246-656 ft.

Amoco will try to secure a drilling rig to carry out the drilling phase.

Rigs that have been working in the Caspian include the Shelf 5 semisubmersible, Khazar 6 jack up, and the refurbished Dede Gordud semi under lease to AIOC for Chirag field drilling.

AIOC is developing unitized Azeri, Chirag, and Guneshli (ACG) fields. ACG oil production is scheduled to begin in August 1997. First well to be drilled by foreign companies in the Caspian, 1 Chirag, was spudded earlier this year (OGJ, Nov. 4, p. 44).